Use the data in Exercise 5-1 to prepare comparative income statements for Fakia Corporation (cal¬

endar year-end 2005) similar to those shown in Exhibit 5.8 for the four inventory methods. Assume expenses are $1,250. The applicable income tax rate is 30%.

1. Which method yields the highest net income?

2. Does net income using weighted average fall between that using FIFO and FIFO?

3. If costs are rising instead of declining, which method would yield the highest net income? kju5